Grad School....as a graduate's option

Today I met a student who is graduating in a few weeks. She got into all the graduate schools she applied to and is going to the school of her choice. She is very happy with the choice, her tuition is paid by the school, and she will work in her area to cover living expenses. A former student who is currently working in a marketing role is applying to an MBA program. A student I met at dinner tonight got admitted to a graduate program in computer gaming. There are other students who are also going to graduate school. Certainly an educated decision in this market.

Obama Does Chrysler

Chrysler has declared bankruptcy today. While this is a technical maneuver, it still represents the failure of another U.S. relic. The sad part is that Obama decided to bail out this company which was taken private by Cerberus, which then appointed the former Home Depot Money Guzzler Robert Nardelli as CEO. In this Obama bailout, the Nardellis of the world come out making millions, for almost no productive work. Many workers lose their jobs. Obama would have been better off just letting this entity disappear.

Classrooms and Memories

Today, one of my former students who currently works for a Fortune 500 CPG company came to talk to my Honors students as a guest speaker. She was in my International Marketing class in the same classroom three years ago. JB is a top-notch person who will do very well and has the potential to lead large organizations. It was just delightful to see the person who used to wear sweat pants/shirts to class transformed into a polished accomplished analyst.

Sun setting on the Cities

The great train of the nineties Internet is grinding slowly forward, scattering wreckage along the way. The new news is that Yahoo will be shutting down Geocities, and Sun Micro which claimed to have put the dot in dot com will be consumed by Oracle. Those of us who have fond memories of the glory days feel a tinge of sadness- a reminder that time and glory are fleeting.

Pessimistically Optimistic

Today, the Global Anti-Poverty Club organized by students did a presentation on Micro Credit and Kiva. A very worthwhile project, it attracted about twenty to twenty five students. Good news is that these were committed interested students; on the flip side, there were more than four thousand students who chose not to show up. The club members did a good job of illustrating the Micro Credit concepts.
Putting quality over quantity, this is one reason to feel optimistic about the youth.

Education, the Texas way

HOUSTON -- Across the rest of America, packing for college usually means gathering up books, clothes and maybe an iPod. Here in gun-loving Texas, it could soon mean packing heat.

That's because a bill heading for likely approval in the state Legislature would allow gun owners who are licensed to carry concealed weapons to bring their firearms onto the state's college and university campuses -- zones where the carrying of any weapons is now strictly prohibited.

More here...

From the Merely Wacko to the Ben Bernanko

The Financial Times reported a fascinating story today..

The ideal interest rate for the US economy in current conditions would be minus 5 per cent, according to internal analysis prepared for the Federal Reserve’s last policy meeting.

The analysis was based on a so-called Taylor-rule approach that estimates an appropriate interest rate based on unemployment and inflation.

A central bank cannot cut interest rates below zero. However, the staff research suggests the Fed should maintain unconventional policies that provide stimulus roughly equivalent to an interest rate of minus 5 per cent.

Fed staff separately estimated what size and type of unconventional operations, including asset purchases, might provide this level of stimulus. They suggested that the Fed should expand its asset purchases by even more than the $1,150bn (€885bn, £788bn) increase policymakers authorised at the last meeting, which included $300bn of Treasury purchases.

The assessment that the US central bank needs to provide stimulus equivalent to a substantially negative interest rate is unlikely to have changed ahead of this week’s policy meeting.

The Fed is not likely to embark on any substantial new programmes at this meeting, in large part because it will not have downgraded its economic forecasts since the last meeting. Indeed, Fed officials may see the risks to the economy as a little more balanced than they were in March, though policymakers probably still see these risks as overall weighted to the downside.

This could set the stage for a more detailed discussion of the framework that will ultimately govern the Fed’s exit strategy.

There is, though, a small but intriguing possibility that the Fed could follow the Bank of Canada in setting out an explicit timeframe over which it expects to keep short-term rates at virtually zero.

While this novel strategy is likely to at least provoke debate within the US central bank, which has shown itself willing to adopt measures first deployed elsewhere, many policymakers would probably be wary of adopting the Canadian approach, following their own unsatisfactory experience in providing guidance on interest rates after the dotcom bubble burst.

Others may feel the Canadian approach would be ineffective as it may not be seen as credibly binding the central bank’s future decisions.

Still, many Fed officials expect they may well keep rates near zero for another 18 months to two years and some might see value in making this more explicit.

Ben Bernanke, chairman, sees the massive expansion of bank reserves caused by the Fed’s unconventional operations as already providing a way to assure the market that the Fed will not be in a position to raise rates for quite some time to come.

The last meeting saw the Fed buy long-term treasuries for the first time in decades. The large initial impact of the move on markets is no longer visible, but officials think the policy was reasonably successful.

Previous staff analysis suggested the $300bn purchase would reduce the yield on 10-year treasuries by 25-35 basis points, and officials think the rate today is about this much lower than it would have been if they had not started buying.

Further purchases are possible, particularly if the Fed again downgrades its economic forecasts. The staff analysis comparing unconventional operations to interest rate cuts suggests more might be needed anyway.

However, policymakers are likely to watch how financial conditions respond to the already-authorised interventions before deciding whether to step up much further.

Bea Arthur and Amita Malik

The past two days have been rather tragic. Two legends, Bea Arthur and Amita Malik, have passed away. They have left us great volumes of work to remember them by.

What motivates a person?

This evening, my mom had made a wonderful innovative dish for dinner. Over the years she has learnt to make a huge number of varied dishes. When we were young she would go to cooking classes after sending four kids to school in the morning. She would come back by 11 and prepare lunch for the kids. She would then make snacks everyday for us so that when we came home we would have something warm to eat before we went out to play. Even now, she experiments with various ingredients and watches a number of cooking shows.
The fascinating thing is that if she was cooking for herself alone, she would make very simple quick dishes. I have never seen her cook interesting dishes just for herself.
What motivates a person to spend so much time and effort and learn and cook so many things just to give pleasure to others?

Land of GOD - Guns, Obfuscation, Denial

***Added some clarification***
On Friday we were discussing culture and its various aspects in my business class. I wrote down
S G A on the board and asked students what it was. After the obvious answer I told them that it was not Student Government Association but Sex, Guns, and Alcohol.
We discussed the fact that it is legal for employees to carry guns to work and leave loaded weapons in their vehicles in some states. We also talked about students carrying guns to school- the Columbine incident, the NIU shootings come to mind.

***It is impossible to do do controlled experiments to prove or disprove the hypothesis that stricter gun control laws lead to lower crime rates. Common sense indicates that a culture and system that makes it harder for one to procure weapons might help, everything else remaining constant. However, the legal systems are not the focus of this piece. Rather, it is on the culture of gun ownership and and the widespread gun violence.***


Today three people were killed and at least one was injured in Athens, Ga., on Saturday when a University of Georgia professor opened fire at a community theater, police officials said. (NYT).

Bob Herbert wrote a really good op-ed piece in the NYT titled "A Culture Soaked in Blood." According to Mr. Herbert, "When the music producer Phil Spector decided, for whatever reason, to kill the actress, Lana Clarkson, all he had to do was reach for his gun — one of the 283 million privately owned firearms that are out there. When John Muhammad and his teenage accomplice, Lee Malvo, went on a killing spree that took 10 lives in the Washington area, the absolute least of their worries was how to get a semiautomatic rifle that fit their deadly mission. We’re confiscating shampoo from carry-on luggage at airports while at the same time handing out high-powered weaponry to criminals and psychotics at gun shows. There were ceremonies marking the recent 10th anniversary of the shootings at Columbine High School, but very few people remember a mass murder just five months after Columbine, when a man with a semiautomatic handgun opened fire on congregants praying in a Baptist church in Fort Worth. Eight people died, including the gunman, who shot himself. A little more than a year before the Columbine killings, two boys with high-powered rifles killed a teacher and four little girls at a school in Jonesboro, Ark. That’s not widely remembered either. When something is as pervasive as gun violence in the U.S., which is as common as baseball in the summertime, it’s very hard for individual cases to remain in the public mind. Homicides are only a part of the story. While more than 12,000 people are murdered with guns annually, the Brady Campaign to Prevent Gun Violence (using the latest available data) tells us that more than 30,000 people are killed over the course of one typical year by guns. That includes 17,000 who commit suicide, nearly 800 who are killed in accidental shootings and more than 300 killed by the police. (In many of the law enforcement shootings, the police officers are reacting to people armed with guns). And then there are the people who are shot but don’t die. Nearly 70,000 fall into that category in a typical year, including 48,000 who are criminally attacked, 4,200 who survive a suicide attempt, more than 15,000 who are shot accidentally, and more than 1,000 — many with a gun in possession — who are shot by the police. The medical cost of treating gunshot wounds in the U.S. is estimated to be well more than $2 billion annually. And the Violence Policy Center, a gun control advocacy group, has noted that nonfatal gunshot wounds are the leading cause of uninsured hospital stays. The toll on children and teenagers is particularly heartbreaking. According to the Brady Campaign, more than 3,000 kids are shot to death in a typical year. More than 1,900 are murdered, more than 800 commit suicide, about 170 are killed accidentally and 20 or so are killed by the police. Another 17,000 are shot but survive. I remember writing from Chicago two years ago about the nearly three dozen public school youngsters who were shot to death in a variety of circumstances around the city over the course of just one school year. Arne Duncan, who was then the chief of the Chicago schools and is now the U.S. secretary of education, said to me at the time: “That’s more than a kid every two weeks. Think about that.” Actually, that’s our problem. We don’t really think about it. If the crime is horrible enough, we’ll go through the motions of public anguish but we never really do anything about it. Americans are as blasé as can be about this relentless slaughter that keeps the culture soaked in blood. This blasé attitude, this willful refusal to acknowledge the scope of the horror, leaves the gun nuts free to press their crazy case for more and more guns in ever more hands. They’re committed to keeping the killing easy, and we should be committed for not stopping them."
Obama has begun to change the culture of America. His biggest challenge will be to change the culture of violence and cruelty that is all-pervasive, and best exemplified by the high chief, Dick Cheney.

Casualties of the Crisis

I listen to NPR regularly, and enjoy the excellent programs it airs. Unfortunately it is not immune to the current crisis.
In a new round of cost-cutting, National Public Radio said it would lay off 13 employees, eliminate contributions to employee retirement accounts for the rest of fiscal 2009 and impose five days of furloughs for all employees before the fiscal year ends on Sept. 30. The cuts, which were reported on Friday in The Washington Post, also include reductions in medical benefit contributions and the addition of unpaid holidays. They follow layoffs of 64 people, or 7 percent of the staff, in December because of a revenue shortfall. Employees at the vice presidential level and above will absorb additional cuts. Merit pay increases scheduled for January 2010 are being eliminated, and 18 unfilled positions are being either eliminated or temporarily frozen. The new cuts add up to savings of about $17 million over the two fiscal years, more than the $15 million deficit that NPR has forecast.

Trucking ahead...and "Steeling" for the Future..

UPS reported that its revenue for 1Q 13.7% lower than least year. Its CEO said that “Economic indicators tell us recovery in the U.S. might begin late this year, but more likely not until 2010. So we expect the second quarter will be another difficult one. As a result, UPS anticipates earnings per diluted share in a range of $0.45 to $0.55."

Another stalwart, Nucor, the largest U.S. steel maker by production, reported its first loss ever as a severe recession sapped demand for the metal. It forecast an even bigger loss for the second quarter, calling conditions the worst it's ever seen.
The comments by its CEO, Mr. Dan DiMicco are quite insightful. "These are the most challenging steel market conditions we have ever seen. It is very unfortunate and extremely frustrating that our country’s misguided economic and political policies over the past two decades have created the current financial crisis.When times get tough the 21,000 plus men and women of Nucor and our David J. Joseph and Harris Steel subsidiaries see opportunities to make our company even better and stronger. As always Nucor’s most significant competitive advantage remains our people. The right people working together as team, the team that takes ownership of driving Nucor’s long term success. This facts experience not only a record of strong profitable growth of more than four decades, but also why we know our best years are still ahead of us. I want to again express my gratitude for the dedication of every member of the Nucor team there at this time of global economic crisis. We realized that this is a time of hardship and difficulty for all of our team mates as older time, the significant loss value for our share holders, but I want to assure you that our work during these adverse economic times will pay big dividends and the inevitable economic recovery arrives. We only have to look back as recently as 2001 to 2003, to see what we achieved during the last economic downturn. Quit simply, we positioned Nucor for the greatest period of book in our history. As always, we are doing it together. Thank you and keep up the good work. Severity of this down turn is unprecedented. Steel production, capacity utilization numbers and the American Iron and Steel Institute tell a story. For this quarter 2009, steel production in the United States declined 53% from the year ago quarter.Industry capacity utilization for the just completed quarter was less than 43%, down from the first quarter of 2008 rate of more than 90%. Nucor is not immune for these conditions and economic crisis unlike anything seen in their life time. Today, we reported the first losing quarter in our history that breaks a record of continues quarterly and annual profitable going back to Nucor’s start in 1966.Warren Buffet said that best last month in his observation that the economy has fallen off a cliff. Now, we have yet to see any evidence that’s abrupt in severe decline in economic activity has reached the bottom. In fact, conditions are continuing to worsen with each successive month so far in 2009. There are few signs of improvement at this time.I wish I was able to write a more encouraging report on current and future second quarter conditions, but as always our team will tell exactly like it is and it is extremely ugly out there. I’ve noted one simple, yet extremely important fact many times over the years in my conversations with investors. Nucor has a business model that even in the good times is based on how the company might have to run things in the bad times.If you wait for an economic crisis to hit to get prepared for it you probably want survive. There never been truer that in today’s economic crisis. A sustained recovery in the economy all depends on while government gets serious and realistic about fixing the deep structure and balances in our huge foreign trade and budget deficits that brought the U.S. economy under world’s economy to this tragic condition.Quite simply, we need significantly more job creation, significantly less debt, significantly lower cost of doing business, not significantly higher cost and a much stronger focused on the top five most important issues facing our country and the world’s future. The economy, the economy, the economy, the economy and the economy extremely certainly presence and our economy suggests that may come down to survival of the fittest in the months and years ahead. (errors are due to a transcription of the conference call).

To (T)wit...

Some interesting news-stories today...

Public television may be nonprofit and government-sponsored, but it has many of the same problems as commercial broadcasters when it comes to the Web. More and more viewers want to watch “Nova,” “Frontline” and “Antiques Roadshow” online, but the public broadcasters worry that that if everything were available on the Internet, they could lose some of their traditional sources of financing: corporate sponsors, viewer donations and DVD sales. Nonetheless, the public TV stations are taking more risks, and on Wednesday they introduced a fancy video portal at PBS.org/video. You can search and browse among thousands of programs, contributed both by PBS and its member stations. You can watch full episodes, and also search for clips and segments.The site is built on new technology that will also allow users to upload video, make comments and otherwise interact with the site and one another. There’s a lot of programming on the new site, including several years’ worth of episodes of many PBS programs, including “Frontline,” “Nova,” “The American Experience,” the “Newshour With Jim Lehrer” and “Antiques Roadshow,” the highest-rated show on the network. Cooking fans may enjoy a library of the Julia Child shows.
***

"Google’s News Timeline is Useful for Bloggers and Writers" By Samuel Dean, GigaOm. "I’ve covered graphical search engines a few times, and mentioned my favorite one: Viewzi. When done right, these sites can deliver much better ways to sift through a lot of results than a typical Google results page. However, that’s not to say that Google isn’t on the case. While it’s not exactly a “graphical” search engine like Viewzi is, I’m finding News Timeline, a brand new way to search from Google itself, very useful. News Timeline is one of the regular search experiments that come out of Google Labs. What it does is show you news stories in a timeline view, with a choice of daily, weekly, monthly, yearly or even decade-centric views. For bloggers and any other folks working in web publishing, it’s an excellent way to follow important stories over time.

Cable Companies are bundling, airlines are unbundling...

Most, if not all, of the cable companies are offering the "triple play," or voice and data in addition to cable entertainment. While individual offerings go for $30-$50 per month, the "bundled" offer is around $99 per month.

The airlines, on the other hand, are unbundling everything in sight. Now, a passenger pays the airfare just to get on the flight. Aisle seat is extra, window is extra, bulkhead seats involve premium charge, checked bags are extra, and so on. Today, Delta announced that it will charge $50 for international travelers who want to check a second bag. When an airline is running at 75% to 80% of capacity and cannot make money, it is the cost structure that has to be considered, not the revenue side. More unbundling of this sort will only reduce demand. It is time that the CEOs started getting paid in 5 figures instead of eight figures and pilots made a half of what they do currently. The cost structure has to come down significantly. Otherwise more planes will be parked, and more capacity will be reduced, but it will not help the business in the long run.

Not your grandma's water...

A female friend of mine let me know a few weeks ago that she drank a few litres of water every day- quite different from the coffee guzzling writer of this blog. She may want to reconsider her water drinking habit- the following should hose it..

AP IMPACT: Tons of released drugs taint US water. U.S. manufacturers, including major drugmakers, have legally released at least 271 million pounds of pharmaceuticals into waterways that often provide drinking water — contamination the federal government has consistently overlooked, according to an Associated Press investigation.

Lowering complexity...

I have taught a course the last two years called "Local Choices Global Effects." Today I came across a NYT Op-Ed piece titled "How Green Is My Bottle?" The authors, Mr. Goleman and Mr. Norris write that 'Earth Day is this Wednesday, and all things “green” will be celebrated. But it’s worth asking: how environmentally friendly are “green” products, really? Consider, for example, this paragon of eco-virtue: the stainless steel water bottle that lets us hydrate without discarding endless plastic bottles. Using a method called life cycle assessment, we have evaluated the environmental and health impact of a stainless steel thermos — from the extraction and processing of its ingredients, to its manufacture, distribution, use and final disposal. There were some surprises. What we think of as “green” turns out to be less so (and, yes, sometimes more so) than we assume...."

It helps to lower our life's complexity by using simple rules and sticking to simple living. My grandfather always used to drink water in little clay pots and then returned them to mother earth. Always clean, 100% recycled. When one considers drinking water for a lifetime using one mug, stainless steel or clay, makes sense rather than buying a new plastic one and discarding it every so often. Of course, as more reports of water contamination come to light, the latest one describing the stuff put out by the pharma industry (AP IMPACT: Tons of released drugs taint US water), one needs to be worried sick.

Obseity...in talk, not food

Too much talking is like eating too much food- the consequences are rather unpleasant. Recently, United Airlines, the crappy one that charges $15 for even one checked bag, declared that it will begin to charge "obese" passengers who require more than one seat. Of course, the airline's definition of obese can keep changing as the seats get narrower and narrower. Now, why doesn't the airline reduce my ticket price because I weigh at least 20% less than the average weight of all passengers on a flight?

While there are no such financial penalties for talking too much, the intellectual punishment is quite high, both for the talkers and the receivers. One needs to develop processing power- the ability to assimilate and analyze information before speaking. If there are so many "great" conversations as are reported, why are we facing the vast array of problems that are resulting from ignorance and miscommunication?

Too much talk....too little substance...too sparse introspection

The current craze about Twitter is enough to drive one crazy! Even some of my colleagues who are not exactly techno-geeks are infatuated with the 140 character assassination of any thoughtful comment.
A colleague remarked to me that the students in his Honors class were not participating in class discussions, which to him meant disrespecting him, the material, and the other students in the class. His expectation was that students, whether they liked or disliked the material or the instructor, would come to class and engage in learning and participate in discussions. He was enquiring about my experience with students in my Honors course. I come from a philosophy/point of view that

1. We talk too much, and process too little.
2. Quantity, as in the amount of debate and number of participants, seems to dominate over quality of debate or of argumentation.

Many of the faculty members I come across believe, rather ignorantly, that they are "legends" - unfortunately only in their own minds. Here are some statements faculty members make that reveal deep ignorance:

1. "We had a great discussion in class today. " I have never had anyone come to me and say "we had a lousy class discussion today." If every discussion is great, where is the power of discrimination? If everyone expressing his/her viewpoint is sufficient for a great discussion, the future of the country is in greater jeopardy than is believed.
2. Students wrote great critical reflection papers. Three words that are used with callous disregard- great, critical, and reflection. I would be happy if one of my students wrote a paper that just showed some thought, some reflection, but after ascertaining relevant facts and data. I have never found anyone who has actually presented anything resembling "critical reflection" but have found plenty who just like to talk. These are the same folks who praise students for 'critical reflection.' How does one separate 'critical reflection' from 'mere mundane reflection?' Perhaps if it can be Twittered, then it is 'critical reflection.'

Thinking...It is hard, much harder than talking.

The positive of the negative..

Credit to Obama for releasing the CIA 'secret memos.' They have not raised the firestorm they should...the methods outlined in the memos are degrading- not just to the prisoners but to the citizens of the USA. Steps should be taken to prevent this type of executive immorality from occurring again.
***
Banks, including Chase, Goldman Sachs, and others are reporting massive profits, and the market is following suit. It is rather easy to make money when the government is handing out money to the banks by the billions.
***
From The Channel Wire: Amazon.com CEO Jeff Bezos said in a letter to shareholders Friday that sales of the Kindle are ahead of projections -- good news for the e-tailer considering both the weak economic climate and the fact that the second version of the Kindle became available only two months ago. "We're grateful and excited that Kindle sales have exceeded our most optimistic expectations," Bezos wrote to Amazon shareholders in a letter posted to the company's Investor Relations home page. "If you haven't seen it, Kindle 2 is everything customers loved about the original Kindle, only thinner, faster, with a crisper display, and longer battery life, and capable of holding 1,500 books." While Amazon hasn't released sales figures for the Kindle 2, which began shipping February 23, a source described as close to Amazon told The Washington Post this week that about 300,000 Kindle 2s have been shipped so far, which would put Amazon's take from the $359-a-pop devices at about $107 million.
***

A tweeting feeling....

The Big O joined the Nit-Tweet gang...
An interesting reflection on the 140 character culture.

(Un)Necessary Luxuries

Nokia reported a steep fall in profits for the first quarter, but emphasized that its Smartphones are doing well... From Businessweek: "Nokia says it sold an impressive 2.6 million units in the quarter of its popular 5800 XpressMusic phone, which features a touchscreen and other features similar to the iPhone but costs about half as much. Launched in November, the 5800 and other new feature-rich products helped the company boost its share in smartphones to 38% from 36% the previous quarter, according to market watcher Strategy Analytics. The gain suggests that Nokia can continue to retake market share as it launches more new smartphones, such as the top-of-the-line touchscreen N97 due out in June. "Nokia is very good at moving features from the high end to the midrange and low end," says Mark McKechnie, an analyst at Broadpoint AmTech in Greenwich, Conn."..

Does one need a Blackberry, or an iPhone? Should they take precedence over eating organic healthy foods?

Hiding behind Trees,Bushes, Viruses...doesn't make for scientific method

As one who got his degrees in engineering and teaches operations and marketing in a business school I am highly amused by the desperate attempts of academicians and practitioners in business to appear "scientific." This is especially evident in the use/abuse of terms and concepts validated in the physical and natural sciences. Back in the nineties there were a plethora of telecommunication companies with names of bushes and trees like Juniper. Then came Cisco and the term eco-system became very popular. Of course, terms like viral networks, entropy, gravity and many others are the mainstays of marketers these days.

A taxing day

The day to file taxes and my state's web based system for filing state taxes is down.
The wonderful world of WWW- as long as it is up!

Genetically Modified Foods

I always introduce the topic of genetically modified foods in my courses- it is a great topic for discussion about any area of study. Recently, we discussed this topic in a business course, and today there was an interesting story on it.

From the New York Times...

Germany announced plans on Tuesday to ban the only genetically modified strain of corn grown in the European Union, dealing a new blow to the American manufacturer, Monsanto, and raising the specter of trade tensions with the United States. The German agriculture minister, Ilse Aigner, said that the move was intended to protect the safety of consumers and the environment.  But she underlined that it would not represent a blanket ban on genetically modified crops.“My decision is not a political decision, it’s a decision based on the facts,” Ms. Aigner said.  “I have come to the conclusion that there is a justifiable reason to believe that genetically modified maize of the type MON 810 presents a danger to the environment.”

Becoming an addict- pharma profit addict

Yesterday, my students started a debate on the role of patents in the health care industry. Since it takes very little money to manufacture the drugs, the prices that people pay are driven by patents. I walked the students through the economics of the pharmaceutical industry. Today, Johnson and Johnson, one of the biggest medical firms, reported its first quarter profits.  What should knock dead any sane reader are the following numbers, as % of sales dollars.

R&D: 10.1% o sales

Sales, general and Admin: 30.7%

Profits to Shareholders (net earnings): 23.3%

Essentially, an industry that claims it wants patent protection because it innovates spends three times as much on promotion as it does on research. Shareholders are taking profits that are more than twice as much as the money going into R&D. In other words, the greatest benefit of patent protection is not innovation, but the profits to shareholders, and the huge sales machine that creates more profit for shareholders.

The pharmaceutical industry, if it is ethical, should come out and acknowledge what its main objective is when it asks for greater patent protection and more patent powers. Perhaps that is asking for too much from an industry that likes to call itself the "ethical pharmaceutical industry."

"Degree"s of Education

What is in a degree? What is education? How is a degree related to or correlated with education? Can someone be considered educated if he never went to a college? These were some of the topics that JB, one of my advisees who is graduating this May, and I discussed this evening. It is always fun to have these types of discussions with a student who is a thinker rather than with peers or colleagues who go through the motions.

Getting Sick...Due to a Lack of Education

To some people education  is about getting degrees. For others like me, it is about developing one's thinking and awareness, and learning about everything.

Today's NYT had a rather moving story about the struggles of the elderly, especially those facing medical issues.  In "States Slashing Social Programs for Vulnerable" Erick Eckholm writes the following..."Battered by the recession and the deepest and most widespread budget deficits in several decades, a large majority of states are slicing into their social safety nets — often crippling preventive efforts that officials say would save money over time....President Obama’s $787 billion stimulus package is helping to alleviate some of the pain, providing large amounts of money to pay for education and unemployment insurance, bolster food stamp programs and expand tax credits for low earners. But the money will offset only 40 percent of the losses in state revenues, and programs for vulnerable groups have been cut in at least 34 states, according to the Center for Budget and Policy Priorities, a private research group in Washington. Perhaps nowhere have the cuts been more disruptive than in Arizona, where more than 1,000 frail elderly people are struggling without home-care aides to help with bathing, housekeeping and trips to the doctor. Officials acknowledge that some are apt to become sicker or fall, ending up in nursing homes at a far higher cost...."

During the nineties a big chunk of the population got wealthy by playing the stock market. During the subsequent bust folks lost money but thanks to the "ownership society" of Bush and Rove the market again soared, all the while on very shaky terra firma. Many thinkers, including myself, have been sounding the warning but the majority of the populace were chasing the easy money and instant gratification. 

Folks seemed to have forgotten that the stock market is legalized gambling, that it is based on a future that no one can predict, and putting money in the market is a foolish thing unless one is extremely smart and gets incredibly lucky. More than fifteen years ago I happened to be visiting New Jersey and had dinner with AR, who is one of the smartest people I know (and an IITian like myself). He was working for Salomon Brothers at the time. We happened to talk about the market and he said that he never placed long-term bets on the market and at the end of every day he went home neither long nor short- he settled everything daily.

Now, individuals and states are paying the price for their wildly errant behavior. Unfortunately even the people who did not indulge in these crooked shenanigans will have to pay a dear price.

The NYT has another article on the careers that people might choose going forward. Its main point is that "The economy, other long-range policy issues and the new administration, according to David Ellwood, dean of Harvard’s Kennedy School of Government, add up to a “benevolent perfect storm,” which could lure talented people to public service in a way not seen in decades." We will see...

A HILL (Human Interaction Level List) to climb...

The levels at which a human deals with any issue, task, idea, etc. can be modeled after the various categories of brand recognition. My 9-level list runs as follows..

1. Absolutely Hate it
2. Mostly hate it
3. Indifferent but may do it if I feel like it
   
4. Indifferent but will do it if you like
5. Mildly like to do it
6. Like to do it
7. Love to do it
8. Passionate about it
9. Evangelize about it

It is an interesting exercise to categorize one's interaction with a task/thought/idea/person along these lines.
Personally, most of my 'enjoyable' things, like running, music, movies, roses, and coffee, tend to fall into the 6-7 categories. Living a 'sustainable' life, social justice, and helping the ones who cannot help themselves, are examples of my 8-9 categories.

The Collective versus the Individual...

In my Global Business course we have been talking about political, economic and legal systems in the world. Quite a few students are still 'brainwashed' and 'brain dead' with fears of communism and socialism, which I try to dispel. Next week we will debate the relevance of patents for health care related products, including pharmaceuticals.

A very relevant article appeared today, courtesy AP, titled "America's uninsured haven't shown collective power..An estimated 50 million people in US lack coverage, but they haven't marched on Washington." It is reproduced below.

WASHINGTON (AP) -- If the uninsured were a political lobbying group, they'd have more members than AARP. The National Mall couldn't hold them if they decided to march on Washington.

But going without health insurance is still seen as a personal issue, a misfortune for many and a choice for some. People who lose coverage often struggle alone instead of turning their frustration into political action.

Illegal immigrants rallied in Washington during past immigration debates, but the uninsured linger in the background as Congress struggles with a health care overhaul that seems to have the best odds in years of passing.

That isolation could have profound repercussions.

Lawmakers already face tough choices to come up with the hundreds of billions it would cost to guarantee coverage for all. The lack of a vocal constituency won't help. Congress might decide to cover the uninsured slowly, in stages.

The uninsured "do not provide political benefit for the aid you give them," said Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health. "That's one of the dilemmas in getting all this money. If I'm in Congress, and I help out farmers, they'll help me out politically. But if I help out the uninsured, they are not likely to help members of Congress get re-elected."

The number of uninsured has grown to an estimated 50 million people because of the recession. Even so, advocates in the halls of Congress are rarely the uninsured themselves. The most visible are groups that represent people who have insurance, usually union members and older people. In the last election, only 10 percent of registered voters said they were uninsured.

The grass-roots group Health Care for America Now plans to bring as many as 15,000 people to Washington this year to lobby Congress for guaranteed coverage. Campaign director Richard Kirsch expects most to have health insurance.

"We would never want to organize the uninsured by themselves because Americans see the problem as affordability, and that is the key thing," he said.

Besides, added Kirsch, the uninsured are too busy scrambling to make ends meet. Many are self-employed; others are holding two or three part-time jobs. "They may not have a lot of time to be activists," he said.

Vicki and Lyle White of Summerfield, Fla., know about such predicaments. They lost their health insurance because Lyle had to retire early after a heart attack left him unable to do his job as a custodian at Disney World. Vicki, 60, sells real estate. Her income has plunged due to the housing collapse.

"We didn't realize that after he had the heart attack no one would want to insure him," said Vicki. The one bright spot is that Lyle, 64, has qualified for Medicare disability benefits and expects to be getting his card in July.

But for now, the Whites have to pay out of pocket for Lyle's visits to the cardiologist and his medications. The bills came to about $5,000 last year. That put a strain on their limited budget because they are still making payments on their house and car.

"I never thought when we got to this age that we would be in such a mess," said Vicki, who has been married to Lyle for 43 years. "We didn't think we would have a heart attack and it would change our life forever."

While her own health is "pretty good," Vicki said she suffers chronic sinus infections and hasn't had a checkup since 2007. "I have just learned to live with it," she said.

The Whites' example shows how the lack of guaranteed health care access undermines middle-class families and puts them at risk, but that many of the uninsured eventually do find coverage. Lyle White has qualified for Medicare, even if the couple must still find a plan for Vicki.

Research shows that nearly half of those who lose coverage find other health insurance in four months or less. That may be another reason the uninsured have not organized an advocacy group. At least until this recession, many have been able to fix the situation themselves.

"The uninsured are a moving target," said Cathy Schoen, a vice president of the Commonwealth Fund, a research group that studies the problems of health care costs and coverage.

But even if gaps in coverage are only temporary, they can be dangerous. "Whenever you are uninsured, you are at risk," said Schoen. "People don't plan very well when they are going to get sick or injured."

Indeed, the Institute of Medicine, which provides scientific advice to the government, has found that a lack of health insurance increases the chances of bad outcomes for people with a range of common ailments, from diabetes and high blood pressure to cancer and stroke. Uninsured patients don't get needed follow-up care, skip taking prescription medicines and put off seeking help when they develop new symptoms.

Such evidence strengthens the case for getting everybody covered right away, Schoen said. But she acknowledges the politics may get tough. "It certainly has been a concern out of our history that unorganized voices aren't heard," she said.

White House: http://www.whitehouse.gov/agenda/health--care/

Health Care for America Now: http://www.healthcareforamericanow.org/

Commonwealth Fund: http://www.commonwealthfund.org/

Institute of Medicine: http://tinyurl.com/dm8gnn

Tooting One's Horn...and Oldies are NOT goldies...

The students who went  on a trip to India with me in January  made a great presentation recently on their experiences. Their audio-visual extravaganza showed the temples, the cities, firms like Infosys, the people, and many other aspects of Indian life. But the most eye-catching part was a clip taken as we were waiting for our bus outside Chennai airport.  A huge mass of vehicles navigating around each other in a narrow road, and every driver leaning on the horn- an aural assault on the tympanum coupled with a visually moving picture. This was one aspect of India that stuck with me as well- the permanent use of the horn, and the various ring tones that go with the horn. Today, I read an interesting piece in FT on this topic- Engineer makes big noise....In India, one of the most used components of any motor vehicle is the horn. Drivers navigating livestock, pedestrians, animal-drawn carts and motor vehicles lean heavily on their horns to express frustration, if not to clear a path. Trucks are emblazoned with the slogan “horn please”. Responsible for much of India’s distinctive road noise is Roots Industries, a small private company that is also the country’s biggest hornmaker. It was founded in 1970 by K. Ramasamy, a US-trained automotive engineer, now 60, who has been obsessed with auto horns since his childhood in an affluent land-owning family near the southern town of Coimbatore.....

*****

Not to be outdone by Obama, Japan's PM  Taro Aso "unveiled a record 15.4 trillion yen ($153 billion) stimulus package to help revive an economy headed toward the worst recession since World War II." Looks like money does grow on trees, whether they are bonsai, Japanese maple or American maple.

*****

Story does not get old...Job market is especially cruel for older workers..Their savings in shambles from the economic downturn, jobless seniors are dusting off their briefcases and trying to head back to work. Many, like Jim Mitchell, a 63-year-old former sales executive, are finding a merciless job market where decades of experience aren't necessarily an asset.

When bank profits zoom, economic crisis can loom...

From today's NYT: "Stocks surged more than 3 percent Thursday as a major bank predicted record profits. The announcement by Wells Fargo, one of the nation’s largest consumer banks, kindled hopes that the financial system, which dragged the larger economy toward the brink, was now poised to lead the way out.The Dow Jones industrial average gained 246 points and the broader Standard & Poor’s 500-stock index rose nearly 4 percent. The S.& P. 500 has now risen more than 25 percent since stocks bottomed out on March 9, one of its best runs since the Great Depression....Wells Fargo sent the stock market on a dizzying rally Thursday when it revealed that its mortgage applications surged to $190 billion in the first quarter, a sharp increase that would lead it to a record $3 billion profit for the period. Like other big banks, Wells appears to have benefited from a surge in mortgage refinancing because of ultralow borrowing rates engineered by the government and an exodus of competitors. Bank of America, JPMorgan Chase, PNC Financial and others have had similarly strong performances and are expected to post improved profitability when earnings reports are issued next week."

These profits are essentially delivered by the Fed and the Treasury to the banks. A revised income statement showing the bank's true operating performance would yield quite a different story. The fact that quite a few of the public are pouring money into equities shows the lack of understanding and a lack of ethics. A higher stock price is beneficial to the managers, but the money may be well spent trying to help the jobless. No matter how low the rates get, the credit defaults will slow down only if employment improves, and currently there is no visible path to that improvement. This author's estimate is that an entire generation here will have to go through pain and learn some of the basics first, before the picture begins to improve. 

Upside Down World, DogGod it!

Today's New York Times has two interesting articles, one on top of another.
"Recession Anxiety Seeps Into Everyday Lives" describes the psychological and physiological effect of the negative outlook. "Hubbard has not lost her job, house or savings, and she and her husband have always been conservative with money. But a few months ago, Ms. Hubbard, a graphic designer in Cambridge, Mass., began having panic attacks over the economy, struggling to breathe and seeing vivid visions of “losing everything,” she said. She “could not stop reading every single economic report,” was so “sick to my stomach I lost 12 pounds” and “was unable to function,” said Ms. Hubbard, 52, who began, for the first time, taking psychiatric medication and getting therapy.In Miami, Victoria Villalba, 44, routinely slept eight hours a night until stories of desperate clients flooding the employment service she runs began jolting her awake at 2 a.m. No longer sleepy, she first began to respond to e-mail, but that caused sleeping colleagues’ BlackBerries to wake them, so now she studies business books and meticulously organizes her closets.“I’m embarrassed,” she said. “Normal people aren’t doing this.”With economic damage expected to last months or years, such reactions are becoming common, experts say. Anxiety, depression and stress are troubling people everywhere, many not suffering significant economic losses, but worrying they will or simply reacting to pervasive uncertainty.Some are seeking counseling or medication for the first time. Others are resuming or increasing treatment, or redirecting therapy for other issues onto economic anxiety.“The economy and fear of what’s going to happen is having a huge effect,” said Sarah Bullard Steck, a Washington therapist who also directs the employee assistance program at the Commerce Department. “People are coming in more” with “severe anxiety” or “more marital strife, some domestic violence, some substance abuse.”Alan A. Axelson, a Pittsburgh psychiatrist, said he was seeing first-time patients and infrequent ones experiencing “relapse and needing more therapy and medication” even though, he said, “Pittsburgh’s actually doing pretty good economically.”

"Bonding With Their Downward-Facing Humans" describes Doga. Kristyn Caliendo does forward-bends with a Jack Russell terrier draped around her neck. In Manhattan, Grace Yang strikes a warrior pose while balancing a Shih Tzu on her thigh. And in Seattle, Chantale Stiller-Anderson practices an asana that requires side-stretching across a 52-pound vizsla.Call it a yogic twist: Downward-facing dog is no longer just for humans.Ludicrous? Possibly. Grist for anyone who thinks that dog-owners have taken yoga too far? Perhaps. But nationwide, classes of doga — yoga with dogs, as it is called — are increasing in number and popularity. Since Ms. Caliendo, a certified yoga instructor in Chicago, began to teach doga less than one year ago, her classes have doubled in size.Not everyone in the yoga community is comfortable with this.“Doga runs the risk of trivializing yoga by turning a 2,500-year-old practice into a fad,” said Julie Lawrence, 60, a yoga instructor and studio owner in Portland, Ore. “To live in harmony with all beings, including dogs, is a truly yogic principle. But yoga class may not be the most appropriate way to express this.”

An educational reward

Today was a rather unusual day. The parents of one of my advisees MS were on campus visiting her, and they took me out to lunch. This is the first time that I have had lunch with the parents of a student. The warmth and affection they showed me is perhaps the greatest reward an educator can get- because it is an acknowledgement of the responsibility we have to guide the young and create the future.

This has been an interesting year- rewarding on some fronts, disappointing and painful on some others, but always educational.

Cut, Cut, Cut

Unfortunately, reports are flooding in about companies cutting benefits to employees, in addition to cutting employees for companies' benefits. An article in USA Today is rather beneficial to read, as it provides more data points. "Almost half of U.S. employees surveyed by Fidelity predict that benefits such as health insurance, retirement savings plans and pension plans won't be provided by their employer by 2019.Most of that group say they'll be responsible for getting their own benefits. A smaller percentage — 18% — says the government will provide for them.Watson Wyatt says that 62% of employers are very confident they'll offer health care benefits 10 years from now, down sharply from 73% last year. It's the first time in the study's 14-year history that employer confidence declined.Health care costs are rising at about 6% to 7% a year, and "if you put that in the context of a difficult economy, most companies aren't prepared to shoulder all of that burden," says Tom Billet, a Watson Wyatt senior health benefits consultant.He says that employees should get used to picking up more of the tab.In general, the average 401(k) account shriveled 27% in 2008, falling to $50,200 from $69,200 in 2007, according to Fidelity. Without an employer match, workers feel extra savings pressure to shore up their sagging retirement accounts.Dozens of companies have pulled back on retirement contributions, according to the Center for Retirement Research at Boston College. General Motors, Eastman Kodak and Sears Holdings are among them."Traditional pensions in the private sector are on their way out," says Alicia Munnell, director of the retirement research center.Yet, she expects 401(k) matches to come back. Many companies that suspended or reduced their matches after the recession of 2001 reinstated their contributions after the economy rebounded, she says.Less formal perks, such as flexible time off, have taken a hit, as well.Robert Novak, owner of Advanced Deck Designs/ACB Construction in Alexandria, Minn., says he once was flexible with his 12-person staff. Now, he's laid off every worker."If and when I get started again, I will not be able to offer anything (in terms of work perks) for at least three years," he says.More elaborate perks, such as all-expenses-paid vacations awarded to top sales people and the use of a company car, have also been affected.Three-fourths of incentive providers, suppliers to the industry and corporate incentive travel buyers said the economy will have a "negative impact on their ability to plan and implement incentive travel programs," according to a survey taken late last year by the Incentive Research Foundation.

On a separate note, IBM, the big dog, is really biting off all cords and cables with its employees. Its new cutting measure: InformationWeek is reporting that IBM workers who work out of home offices will no longer be reimbursed for Internet access. While this trend may not surprise most of you who already pay for Internet access at home and happen to work there, it's been a longstanding practice at IBM since before the Internet was your source for everything. The new rules go into effect for IBM employees on May 1. From the article (InformationWeek obtained an internal IBM memo): "Today Internet access has become pervasive around the world and in-home Internet contracts have become commonplace along with cable and other telephony services," IBM said in the note, dated March 30. It added that it "remains fully committed to mobility and flexible work arrangements."IBM officials declined to comment, but the move is likely a cost-cutting measure -- and it could mean big savings for the company. Of its 115,000 U.S. workers, about 46,000 are based at what IBM calls "alternative workplaces," a definition that includes home offices. Assuming each worker pays about $30 per month for a broadband connection, IBM stands to save up to $16 million annually from the move in the United States alone.

No longer in Icy waters

There are many reasons why bottled water is a disaster for the planet. Emily Sohn writes in the article titled "Bottled Water Carries Hidden Cost to Earth" that "$1.79 might seem like a small price to pay for a bottle of water. But it costs the Earth far more than that. Compared to a liter of tap water, producing a liter of bottled water requires as much as 2,000 times more energy, according to the first analysis of its kind. The study also found that our nation's bottled water habit sucked up the equivalent of 32 to 54 million barrels of oil last year."

While this is no watery matter, BBC reports that "An ice bridge linking a shelf of ice the size of Jamaica to two islands in Antarctica has snapped. Scientists say the collapse could mean the Wilkins Ice Shelf is on the brink of breaking away, and provides further evidence of rapid change in the region. Sited on the western side of the Antarctic Peninsula, the Wilkins shelf has been retreating since the 1990s. Researchers regarded the ice bridge as an important barrier, holding the remnant shelf structure in place. Its removal will allow ice to move more freely between Charcot and Latady islands, into the open ocean. European Space Agency satellite pictures had indicated last week that cracks were starting to appear in the bridge. Newly created icebergs were seen to be floating in the sea on the western side of the peninsula, which juts up from the continent towards South America's southern tip."

Balancing Discipline with Freedom- but always providing Assurance

Taking students on international trips is an incredibly energizing, entertaining and challenging affair. I have always thought about how much freedom to give to students and how much discipline I should impose. On this trip I was not the leader so I did not have the task of imposing discipline. But I did find that on occasion the students needed to feel that their concerns were being heard, even when not much could be done about the issues. Giving them a shoulder to lean on and reducing their anxieties while also enforcing the rules- certainly kept me engaged.
When students write that "you truly helped make the trip a wonderful experience. I so enjoyed racing you every where!Thank you for all of your insight and humor" and "Hahaha, you are too funny! ...It was great to have you along on the Turkish Adventure!!" I think I did a reasonable job.
Of course, when a student says that "It was so great to have you on the trip with us! You humor and knowledge really added to the experience. It was so fun for me to have someone along with such great musical taste!" it is icing on the Turkish cake..

Turkey and EU

On a recent trip to Turkey, we met with the editor of a leading national newspaper and discussed a number of issues, including Turkey's acceptance into the EU. This is one of the sore spots for Turkey, with many believing that an "all-Christian" club wants to prevent a predominantly Muslim country from joining it. The editor reminded us that the educated realize that it is an economic club more than a religious club, and economics are driving the decision. The EU website states that "Turkey, a member of NATO, with a long-standing association agreement with the EU, applied for membership in 1987. Its geographical location and political history made the EU hesitate for a long time before replying positively to its application. However, in October 2005, the European Council opened accession negotiations with Turkey." The editor pointed out that the conditions imposed on Turkey exceed all the conditions imposed on the countries that have been admitted to the EU since 1987 when Turkey filed for acceptance. Since Turkey's filing, Austria, Finland, many former Soviet-bloc countries, Bulgaria, and Romania have been allowed into the EU.

President Obama has called upon EU to accept Turkey. It is the wise thing to do- politically, economically, and culturally. Sarkozy should stop being a racist and a jingoist and deal with Turkey as a country that is just as important as France. Both EU and Turkey can gain a lot from each other. I was very impressed by the vitality of Turkey.

No wonder there are anti-capitalism protests in France

Apparently "It was perhaps not what Michelle Obama expected on her first presidential foray to France. But it was certainly very French. Anti-war and anti-capitalist protesters tangled the streets of the Alsatian city of Strasbourg and thwarted her planned visit to an anti-cancer research center with other spouses of NATO leaders."

What is very disturbing is a report in the Washington Post that "The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials....
In one program, designed to restart small-business lending, President Obama's officials are planning to set up a middleman called a special-purpose vehicle — a term made notorious during the Enron scandal — or another type of entity to evade the congressional mandates, sources familiar with the matter said. In another program, which seeks to restart consumer lending, a special entity was created largely for the separate purpose of getting around legal limits on the Federal Reserve, which is helping fund this initiative. The Fed does not ordinarily provide support for the markets that finance credit cards, auto loans and student loans but could channel the funds through a middleman. At first, when the initiative was being developed last year, the Bush administration decided to apply executive-pay limits to firms participating in this program. But Obama officials reversed that decision days before it was unveiled on March 3 and lifted the curbs, according to sources who spoke on condition of anonymity because the discussions were private."

The supposedly "pro-worker" Obama is now encouraging these shenanigans so that the crooks who led the economy to this disaster are rewarded with million dollar bonuses.
As described by this article..Big Bonuses at Fannie and Freddie Draw Fire... Fannie Mae and Freddie Mac, the two troubled companies at the heart of the nation’s mortgage market, are set to pay their employees “retention bonuses” totaling $210 million, despite calls from lawmakers to cancel the payments. The bonuses, which were made public on Friday, were defended by the companies’ federal regulator, James B. Lockhart, who said he intended to let them proceed. In a letter sent last week to Senator Charles E. Grassley, an Iowa Republican, Mr. Lockhart disclosed that 7,600 Fannie and Freddie workers were scheduled to receive payouts aimed at retaining those “employees most critical to keep and difficult to replace.” Under the plan, 213 employees will receive retention bonuses worth more than $100,000 this year, and one Freddie Mac executive will receive $1.3 million.

Of course, not to be undone, Obama's key players in the administration have also raked in the dough, especially during the past year or two as George Bush rained taxpayer money on these and other clowns...

Lawrence H. Summers, the top economic adviser to President Obama, earned more than $5 million last year from the hedge fund D. E. Shaw and collected $2.7 million in speaking fees from Wall Street companies that received government bailout money, the White House disclosed Friday in releasing financial information about top officials. Mr. Summers, the director of the National Economic Council, wields important influence over Mr. Obama’s policy decisions for the troubled financial industry, including firms from which he recently received payments. Last year, he reported making 40 paid appearances, including a $135,000 speech to the investment firm Goldman Sachs, in addition to his earnings from the hedge fund, a sector the administration is trying to regulate. He appeared before large Wall Street companies like Citigroup ($45,000), J. P. Morgan ($67,500) and the now defunct Lehman Brothers ($67,500), according to his disclosure report. He reported being paid $10,000 for a speaking date at Yale and $90,000 to address an organization of Mexican banks. David Axelrod, who was the chief campaign strategist to Mr. Obama and now serves as a senior adviser to the president, reported a salary of $1 million last year from his two consulting firms. Over the next five years, according to his disclosure form, he will get $3 million from the sale of the two firms, which provide media and strategic advice to political clients. He listed assets of about $7 million to $10 million, and reported a long list of Democratic clients and a few corporate concerns, including AT&T and the Exelon Corporation, a nuclear energy company. The disclosure forms also shed further light on the compensation received by a top Obama aide who previously worked for Citigroup, one of the largest recipients of taxpayer bailout money. The aide, Michael Froman, deputy national security adviser for international economic affairs, received more than $7.4 million from the company from January 2008 to when he joined the White House this year. 'Shameful'
That money included a year-end bonus of $2.25 million for work in 2008, which Citigroup paid him in January. Such bonuses have prompted political controversy in recent months, including sharp criticism from Mr. Obama, who in January branded them as “shameful.” The White House had previously acknowledged that Mr. Froman received such a year-end bonus and said he had decided to give it to charity, but would not say what it was. The administration said Friday that Mr. Froman was working on giving the $2.25 million to a combination of charities related to homelessness and cancer, which took the life of his son this year. Millionaires work in a variety of positions across the administration, and they include Desirée Rogers, the White House social secretary. Ms. Rogers, a close Chicago friend of the Obama family, reported income of $2.3 million last year. She earned a salary of $1.8 million from People’s Gas & North Shore Gas, along with three other sources of income from serving on insurance company boards. Thomas E. Donilon, the deputy national security adviser, reported earning $3.9 million as a partner at the Washington law firm O’Melveny & Myers. His disclosure form says major clients included Citigroup, Goldman Sachs and Apollo Management, a private equity firm in New York that specializes in distressed assets and corporate restructuring. Mr. Donilon is also entitled to future pension payments from Fannie Mae, where he worked from 1999 to 2005.
The 'ethics depression' appears to be with us for a long, long time..

Thanks to the students

Today one of my advisees EC came in to see me. She was very happy- she had got an internship with a Fortune 500 company, she was doing very well in classes, and generally was enjoying herself. What was amazing to me was the difference in EC from three years ago. She had grown up! As she talked about her interests, I realized she had a solid foundation of ethics, and that she found great joy in sharing. What a gift!

MS, another of my advisees who is graduating this May, has won two awards already and is in the running for the senior of the year, along with another advisee JB. Both are excellent students, JB being a rare gem. I hope one of them wins the award.

ZJ, KL, CL, MKR, and other advisees of mine are terrific students who are also graduating this year. This group is one of the finest group of students I have known, and I will truly miss their company.

Thanks for the memories, kids!

Detoxifying Bank Assets..but making the public eat toxic assets

Treasury Secretary Timothy Geithner has been working to shift all the toxic assets of banks to the public. His latest strategy is to give money to folks like PIMCO to buy up the toxic assets of financial institutions by using leverage with no risk, i.e. the money used to buy these assets would be guaranteed by the Treasury. The equity markets are rallying. The sad situation is that the crooked few who benefit are screwing the hardworking part of the public. As I have written before, this is a crisis of ethics, not one of finance or of confidence.

Bloomberg reports..
Treasury Secretary Timothy Geithner’s plan to rid banks and markets of devalued assets may be a boon for Pacific Investment Management Co.’s Bill Gross. The plan may reward investors with 20 percent annual returns on “really ‘toxic’” mortgages bought at 45 cents on the dollar by allowing them to borrow six times their money with “non-recourse” government-backed debt, New York-based Credit Suisse Group AG analysts Carl Lantz and Dominic Konstam wrote in a March 27 report. That loan would be worth 15 cents to an investor seeking the same return who can’t use borrowed money. Geithner’s Public-Private Investment Program, or PPIP, promises to boost prices enough to encourage banks, insurers and hedge funds to sell their mortgage holdings, freeing them to make loans while creating a potential windfall for investors.Geithner’s plan encourages investors to buy as much as $1 trillion of real-estate assets by using $75 billion to $100 billion provided by the Treasury and government loans. The goal of the Fed and the Treasury since September has been to cleanse banks of troubled assets. The Treasury would match the money asset managers raise to join them in public-private funds. The Federal Deposit Insurance Corp. would guarantee borrowing offered to funds buying loans, while the Treasury and Fed would offer financing to mortgage- securities buyers. The Fed loans may be made available to investors that are not part of the public-private funds.

***Staggering Beyond Belief***
The government and Fed have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s, Bloomberg data show.
*****

Representative Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee, said in an April 1 interview that the distribution of half of the profits to the investor “does bother me.” “But even beyond that, what bothers me even more is it’s taxpayer money,” Bachus said. “What you are doing is artificially inflating the price of those assets because at the present prices the financial institutions won’t sell them.” ‘Taxpayer Loses’ Nobel prize-winning economists Paul Krugman, a professor at Princeton University in Princeton, New Jersey, and Joseph Stiglitz, a professor at the Business School of Columbia University in New York, blasted Geithner’s plan for putting the taxpayer on the hook for losses with what they say is little likelihood of success. “The Geithner plan works only if and when the taxpayer loses big time,” Stiglitz wrote in the New York Times this week. “With the government absorbing the losses, the market doesn’t care if the banks are ‘cheating’ them by selling their lousiest assets, because the government bears the cost.” Krugman wrote in the Times last month that “Obama is squandering his credibility” with the plan.

***
It is a sad state of affairs.
****

Unlike Geithner’s plan for loans, the public-private funds for securities will be limited initially to only five managers, such as Pimco and BlackRock, already overseeing $10 billion of the assets targeted. That program will buy securities from holders of toxic assets other than banks. “There it’s probably going to work -- for five people,” said Dan Castro, chief risk officer at hedge fund Huxley Capital Management in New York. “You’re selecting a very small group of large guys and giving them all the advantages.” By providing loans, the government may allow investors to more than double their potential profits.If the Fed provides a five-year non-recourse loan and requires an investor to put up only 85 percent of the cost of the securities, then that investor could “walk away” when the loan expires and still have earned 25 percent returns, Lehman and Tcherkassova wrote. That assumes losses on the underlying loans don’t exceed 30 percent. That type of bond has risen more than 10 cents on the dollar since the plan was announced, according to Wheeler. The amount of leverage available under the Fed’s program hasn’t been announced. The FDIC program will offer as much as six times the money raised by the private-public funds from individuals and the Treasury.

Stock Market is Up, so is Depression

The stock market has been going up the past few weeks, despite some downright depressive news. Today, Toyota shares were up because sales were down just 39%, less than the estimated 41%. India's exports are down, China's manufacturing is contracting.
An interesting twist comes from South Korea. NYT reports - Around the world, global industrial giants like Sony and General Motors are shedding workers as the worldwide recession depresses demand for goods. But the biggest conglomerates in South Korea are trying something different: hiring new workers by the thousands. South Korea is not the only country trying to prevent major job losses by asking workers to reduce hours or take pay cuts, but it has turned job preservation into something of a national drive, with the government appealing to both unionized workers and management to set aside differences for the economy’s sake. Saving jobs, President Lee Myung-bak has said, is “our No. 1 goal.”